Anybody owns rentals in D neighborhoods?

6 Replies

Hi guys, does anybody own rentals in D/F neighborhoods?

If yes, what are the difficulties that you encountered?

I personally think that D neighborhoods in small towns are different than properties in D neighborhoods in big towns. Do you think there is a difference in quality of tenants between small and large towns D/F neighborhoods? 

I did own D level rentals but I sold them.  I have a low idiot tolerance.  So I had to sell them to keep myself from murdering my tenants. 

The way the market works there is a inverse relationship between rental price and tenant problems.  The lower the price (relative to the market) the higher the rate and difficult of tenant problems.  Tenants in higher priced property will be responsible adults with jobs and they will have some level of education.  When you get down to D properties, you are generally dealing with large children who need a lot of supervision. I actually had a tenant who attempted to flush a chicken carcass down the toilet, and another who just threw dirty diapers into the back yard.  You will spend a lot more time in court with D rentals and they will keep you in court because they have been D tenants all their lives and they know how to work the system. Now there is GREAT cash flow in D tenants but you have to be able to deal with tenants. For me, money is not worth that much of a hassle.

Screen, screen, screen, your tenants. Also, make sure you check their references and past landlords. Class D renters tend to have poor credit, therefore you're most going to have to base your screening off of their character. Get the whole story about your tenants and never just take their word. I'm firm but fair on my tenants too, you're basically acting as their 3rd parent. 

I agree with @Nick Rutkowski .  The key is proper screening.  

Just as there are immature irresponsible people who earn middle class livings, there are immature irresponsible people who are earning just enough to survive.  

The key to renting in lower-income neighborhoods is proper screening.  Those landlords who attempt to do business in lower-income neighborhoods MUST understand their customers, the landlords must be able to consistently and effectively communicate with their customers, AND the landlords must screen effectively.  If a landlord cannot do those three things well, their investments in lower-income neighborhoods will more than likely fail.

Instead of overly relying on credit score, a landlord in lower-income neighborhoods should focus on income verification, check for absolutely no sign of prior evictions, and check past landlords if possible.

Thank you guys!

I actually have a rental in a small town in a D neighborhood. Ive had it since 2009...Had 2 tenants. Never had any issues...Probably just got lucky...

Thank you guys so much for all your help!

D class defiantly requires you to be there more frequently  babysitting the tenants . They need watched over Like mischievous toddlers because if left to  themselves they will and do make poor decisions 

Mary Jay,

I agree with all the above posts (Josh’s comments so true).  I still like D’s for the cash flow and crazy low prices you can get them for sometimes, but they are a hassle.  For the last few years I’ve had a property manager who is the D property master.  He gets them to pay, handles the chaos and keeps it all in check.  I’d probably have lost my patience and moved on  toward the lower profit, less hassle stuff if it wasn’t for him.  If you’re in D’s, you need skilled property mgt to make it work.

Good Luck!

Chris